NEW YORK (Reuters) – Robust corporate earnings contributed to the upswing in global equity markets on Wednesday, easing off after a brutal October in which stocks suffered one of their worst slumps since the financial crisis ten years ago.
Traders work on the New York Stock Exchange (NYSE) floor in New York, USA, October 29, 2018. REUTERS / Brendan Mcdermid
Strong earnings reports in the US and Europe provided a broad rally, although data showed that China's factory growth was at its lowest level in two years. Investors plummeted into the US dollar, reaching a 16-month high, while the Chinese offshore yuan hit a 22-month low.
The MSCI World Stock Index, which tracks equities in 47 countries, rose 0.6 percent, but is down 8.2 percent in October, the worst month since 2012. The index fell 13 percent from the all-time highs reached in January.
However, investors were cautious despite the broad rally.
"Ultimately, I still believe we are in for further downslope and rallies for selling, but bear market bruising is not usually a comfortable affair," said Neil Campling, co-head of global issues group at Mirabaud Securities.
"I think a 2-3 day fight in the direction of the downtrend. Then we can go back to the bigger picture – to the middle dates (elections in the US), to trade wars, to interest rates, etc., as soon as some short films have been removed from the tape. "
The Dow Jones Industrial Average rose 314.71 points or 1.27 percent to 25,189.35, the S & P 500 rose 38.95 points or 1.45 percent to 2,721.58 and the Nasdaq Composite rose 175 percent. 69 points or 2.45 percent to 7,337.34.
The Europe-wide STOXX 600 index rose 1.82 percent.
The dollar index rose 0.09 percent against a basket of six major currencies and 0.22 percent against the euro at $ 1.1319.
"Eurozone growth figures have been disappointing and the Bank of Japan is holding a cautious stance at today's political session, leaving the dollar with more scope for the current situation," said Paul Bednarczyk, director of G10 FX at Continuum Economics in London.
The Chinese currency lost 1.4 percent in October, the seventh successive consecutive month, and the longest lost defeat.
Gold, which was set for its best month since January, fell on the stronger dollar. Spot gold fell 0.8 percent to $ 1,212.64 per ounce. US gold futures fell 0.92 percent to $ 1,214.00 an ounce.
The recovery in global equity prices, including overnight Wall Street profits, boosted government bond yields. The 10-year benchmark index fell 13/32 lately, yielding 3.1586 percent after 3.109 percent late Tuesday.
Oil prices rebounded as markets lined up to impose US sanctions on Iran next week. OR
US crude oil prices fell 0.33 percent to $ 65.96 a barrel, and Brent was $ 75.71, down 0.32 percent.
Reporting by David Randall; Editing by Bernadette Baum